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http://www.theaustralian.com.au/bus...p/news-story/a043f09061bb4773f82a1b995e874ffe

Mirabela noteholders plan debt for equity swap
An ad hoc group of Mirabela noteholders, led by New York’s Guggenheim Investments, have proposed a deed of company arrangement to swap all the company’s debt for a 95 per cent equity stake in the distressed Perth-based nickel miner whose main mining operations are in Brazil.
The noteholders plan to renounce their claims against Mirabela contingent on the Federal Court of Australia extinguishing the equity stakes of the nickel miner’s current shareholders, according to a report by Mirabela’s administrator KordaMentha that was emailed to Data Room.
Mirabela plans to issue a prospectus for a $US115 million convertible note issue as part of a recapitalisation plan that has the potential of an additional $US20m being raised. The company will only get the $115m if the court agrees to the debt for equity swap.
In April 2011, Mirabela issued unsecured notes with a face value of $US395m. The notes, as of April 30 this year, had a balance of $US431.9m, which included accrued interest. The ad hoc group of noteholders holds more than 65 per cent of these notes.
“The Mirabela deed of company arrangement seeks to implement a capital restructure of Mirabela to enable the group to continue operating as a going concern,” KordaMentha said in its report on the company.
On May 26 Mirabela’s recapitalisation plan will be filed with the Australian Securities and Investments Commission. A Federal Court hearing to approve the debt for equity swap is expected to be held next month with a decision expected in June.
KordaMentha values Mirabela as a non-distressed company at between $US150m and $US235m. The administrators expect a deed of company arrangement together with the placement of convertible securities to take place by June 20.
In an email to Data Room, a group of Mirabela’s existing shareholders MBN Class Action Group said they plan to hire legal representation. In distressed corporate situations equity holders’ claims are typically subservient to debt holders.
Mirabela incurred losses before tax of $US891.9m since it began commercial production in the 2010 financial year through to its 2013 financial year.
Between 2010 and 2013 Mirabela recorded aggregate earnings before interest, tax, depreciation and amortisation of $US27.6m, far exceeded by borrowing costs of $US131.7m because of declining nickel prices, the loss of receipts from one of its two major offtake counterparties and operational problems.
Mirabela has now drawn $U45m worth of funds available under an interim financing agreement that will secure the company’s operating future until the recapitalisation is completed.
Mirabela’s secured and unsecured noteholders have hired Cleary Gottlieb Steen & Hamilton LLP to provide restructuring and other legal advice. Gilbert + Tobin is also acting for the noteholders. Rothschild is the investment bank advising the noteholders. The investment bank advising Mirabela is Houlihan Lokey.